S.Ponnambalam v. The Income Tax Officer, Ward-I(1) Thanjavur
[Citation -2016-LL-1006-30]

Citation 2016-LL-1006-30
Appellant Name S.Ponnambalam
Respondent Name The Income Tax Officer, Ward-I(1) Thanjavur
Court ITAT-Chennai
Relevant Act Income-tax
Date of Order 06/10/2016
Assessment Year 2007-08
Judgment View Judgment
Keyword Tags unexplained cash credit • imposition of penalty • agricultural income • business of trading • concealed income • credit balance
Bot Summary: Brief facts are that the assessee is an individual engaged in the business of trading in coffee powder and earning commission income, filed his return of income for the assessment year 2007-08 admitting income of Rs.1,87,000/- and agricultural income of Rs.6.00 lakhs on 14.9.2007. Rejecting the submissions of the assessee, the learned Assessing Officer not only made addition of Rs.49.00 lakhs in the hands of the assessee but also invoked the penal provisions of section 271(1)(c) of the Act for levying penalty and accordingly levied minimum penalty of Rs.16,52,002/-. The learned Authorized Representative argued before us relying in the decision of the jurisdictional High Court in the case of CIT Vs. J.V.Appadurai Chettiar reported in 221 ITR 849 wherein it was held that when the assessee filed revised return surrendering an amount which was claimed as credit balance in the name of one Mr. Gopal Mudaliar because Mr.Gopal Mudaliar denied the transaction, then in such case penalty cannot be levied. From the facts of the case, it is apparent that the assessee had disclosed the details of the sundry creditors before the Revenue. In these circumstances, the decision of the Hon ble jurisdictional Madras High Court cited by the assessee in the case of CIT Vs. J.V.Appadurai Chettiar Co., will be applicable to the case of the assessee. If the assessee 6 ITA No.1013 /Mds/2013 gives an explanation which is unproved but not disproved i.e., it is not accepted but circumstances do not lead to the reasonable and positive inference that the assessee s case is false, the Explanation cannot help the Department because there will be no material to show that the amount in question was the income of the assessee. Further, we find that the decision of the Hon ble Apex Court relied by the Revenue in the case of Union of India Vs. Dharmendra Textiles Processors cited supra, is not applicable in the case of the assessee because the facts and circumstances of both the cases are not identical.


IN INCOME TAX APPELLATE TRIBUNAL , C BENCH, CHENNAI BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER I.T. A. No. 1013 Mds/2 013 (Assessment Year: 2007-08) Mr. S.Ponnambalam Vs Income Tax Officer, 3, Sunnambukkara Street, Ward-I(1) Pattukottai Thanjavur. PAN: AEAPP5045A (Appellant) ( Respondent) Appellant by : Mr. K.Ravi, Advocate Respondent by : Mr. A.V.Sreekanth, JCIT Da t e of h e ar in g : 31st August,2016 D at e of Pr on oun c em ent : 6th October, 2016 O R D E R Per A. Mohan Alankamony, AM:- This appeal is filed by assessee aggrieved by order of learned Commissioner of Income Tax (Appeals), Tiruchirapalli dated 21.01.2013 in ITA No.138/2010-11 passed under section 271(1)(c) r.w.s. 250(6) of Act. 2. assessee has raised several grounds in his appeal, however, crux of issue is as follows:- learned Commissioner of Income Tax (Appeals) has erred in sustaining minimum penalty of 2 ITA No.1013 /Mds/2013 Rs.16,52,002/- levied by learned Assessing Officer under section 271(1)(c) of Act. 3. Brief facts are that assessee is individual engaged in business of trading in coffee powder and earning commission income, filed his return of income for assessment year 2007-08 admitting income of Rs.1,87,000/- and agricultural income of Rs.6.00 lakhs on 14.9.2007. Subsequently, case was taken up for scrutiny and assessment was completed on 24.12.2009 wherein learned Assessing Officer made addition of Rs.49.00 lakhs under head unexplained cash credits. During course of assessment proceedings, it was noticed by learned Assessing Officer that assessee had disclosed amount of Rs.49.00 lakhs as sundry creditors in name of Shri N.K.R Shanmugham. On verifying balance sheet of Mr. NKR Shanmugham it was found that no such corresponding amount was reflected in his books of account. Subsequently it was explained by assessee that he had received amount from Mr. NKR Shanmugham who was assessee s uncle, who in turn had received amount from Mr. 3 ITA No.1013 /Mds/2013 A.Namasivayam, HUF. However, assessee could neither produce Mr. A.Namasivayam before learned Assessing Officer nor furnished any further evidence. Thereafter, assessee agreed to offer amount of Rs.49.00 lakhs as his income. assessee further clarified that he had filed return of income based on assurance that he will get confirmation from creditors, which at this point of time, creditors failed to do so. Rejecting submissions of assessee, learned Assessing Officer not only made addition of Rs.49.00 lakhs in hands of assessee but also invoked penal provisions of section 271(1)(c) of Act for levying penalty and accordingly levied minimum penalty of Rs.16,52,002/-. On appeal, learned Commissioner of Income Tax (Appeals) confirmed order of learned Assessing Officer by observing as under:- 6. After having gone through written submissions statements of facts as well as penalty order, Assessing Officer has elaborately dealt loan credits of Rs.49 lakhs as unexplained cash credits and discussed in her order for levying penalty. Since appellant could not furnish any details regarding source of cash credits/loan creditors in form of confirmation letters, appellant failed to prove identity, credit worthiness and capacity to level to lend Rs.49 lakhs from so called loan creditors, appellant has furnished inaccurate particulars and as well misrepresented facts during course of assessment proceedings and hence there is no iota of 4 ITA No.1013 /Mds/2013 doubt in my mind in confirming penalty levied by Assessing Officer. I also rely on ratios held in several case laws in favour of Revenue for levying penalty under section 271(1)(c). 4. learned Authorized Representative argued before us relying in decision of jurisdictional High Court in case of CIT Vs. J.V.Appadurai Chettiar reported in 221 ITR 849 wherein it was held that when assessee filed revised return surrendering amount which was claimed as credit balance in name of one Mr. Gopal Mudaliar because Mr.Gopal Mudaliar denied transaction, then in such case penalty cannot be levied. 5. learned Departmental Representative, on other hand, argued in support of decision of Revenue relying in decision of Hon ble Apex Court in case of Union of India Vs. Dharmendra Textile Processors & Ors reported in 306 ITR 277. 6. We have heard rival submissions and carefully perused materials available on record. From facts of case, it is apparent that assessee had disclosed details of sundry creditors before Revenue. 5 ITA No.1013 /Mds/2013 assessee also disclosed particulars of Mr. A.Namasivayam and Smt. P.Kamachi to explain bonafide of sundry creditors. It appears that Revenue has not exercised its vast powers to examine these individuals to disprove explanation tendered by assessee. In these circumstances, decision of Hon ble jurisdictional Madras High Court cited by assessee in case of CIT Vs. J.V.Appadurai Chettiar Co., will be applicable to case of assessee. Moreover, in case of National Textiles Vs. CIT reported in 249 ITR 125 Hon ble Gujarat High Court had held that provisions of s. 68 permitting AO to treat unexplained cash credit as income are enabling provisions for making certain additions, where there is failure by assessee to give explanation or where explanation is not to satisfaction of AO. However, addition made on this count would not automatically justify imposition of penalty under s. 271(1)(c) by recourse only to Expln. 1 below s. 271(1)(c).No penalty can be imposed if facts and circumstances are equally consistent with hypothesis that amount does not represent concealed income as with hypothesis that it does. If assessee 6 ITA No.1013 /Mds/2013 gives explanation which is unproved but not disproved i.e., it is not accepted but circumstances do not lead to reasonable and positive inference that assessee s case is false, Explanation cannot help Department because there will be no material to show that amount in question was income of assessee. Further, we find that decision of Hon ble Apex Court relied by Revenue in case of Union of India Vs. Dharmendra Textiles Processors cited supra, is not applicable in case of assessee because facts and circumstances of both cases are not identical. Therefore, relying in decisions of Hon ble jurisdictional and Gujarat High Court supra, we hereby direct learned Assessing Officer to delete minimum penalty of Rs.16,52,002/- levied under section 271(1)(c) of Act in case of case. 7. In result, appeal of assessee is allowed. Order pronounced in open court on 6th October, 2016 Sd/- Sd/- (N.R.S.Ganesan) ( A.Mohan Alankamony ) Judicial Member Accountant Member Chennai, Dated 6th October, 2016 somu 7 ITA No.1013 /Mds/2013 Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR 6. GF S.Ponnambalam v. Income Tax Officer, Ward-I(1) Thanjavur
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